Application of America-First Approach to RVOs Well-Intended, But Misses the Mark

by Donnell Rehagen (National Biodiesel Board) The first action by the Trump administration on the Renewable Fuel Standard was much anticipated. The National Biodiesel Board and the entire biofuels industry eagerly awaited the 2018 renewable volume obligations (RVO) proposal released in July. The RFS was intended to move this country toward advanced biofuels, and the biodiesel industry has risen to the challenge of the RFS program every year with the potential to continue growing with the right policy signals.

After much consideration and input from our members, our industry working group dedicated to making recommendations on the RVOs and our governing board, NBB recommended U.S. EPA propose a 2018 advanced-biofuel volume of 5.25 billion ethanol-equivalent gallons and a 2019 biomass-based diesel volume of 2.75 billion gallons.

Increased volumes would enhance stability in the marketplace, provide room for growth in our industry, increase opportunities for U.S. producers, and provide a clear signal that American-made advanced biofuels are a key component of President Trump’s plan for “energy dominance.”

While the July announcement was just a proposal, we felt the disappointment of maintaining the minimum required biomass-based diesel volume at 2.1 billion gallons from 2018 for 2019 and a proposal that slightly decreases the 2018 volume for advanced biofuels to 4.24 billion gallons from the 4.28 billion gallons EPA set for 2017. While the decrease in advanced biofuels corresponds with lower cellulosic biofuel volumes from 2017, EPA’s proposal does not show the growth in advanced biofuels that Congress intended or the growth in biomass-based diesel we know can be achieved.

In the proposal, EPA argues that the biodiesel industry’s ability to exceed the requirements of the biomass-based diesel category means that the proposed volumes are adequate:

But the RFS was intended to ensure growth of advanced biofuels to compete against petroleum, and the biomass-based diesel category ensures that growth occurs in the diesel sector. Market growth and new investments are stimulated by the policy signals sent by increased volumes. Without the market stability provided by higher volumes, investors are less likely to fund infrastructure needs or new employee hires—curtailing the ability of biodiesel to create new domestic jobs.

EPA acknowledges in the proposal that there is additional capacity and available feedstock for more American-made biomass-based diesel. Simultaneously, it cites growing biofuels imports as a concern and a reason for not increasing volumes. The RFS is simply not the appropriate place, nor is it an effective way to address this concern.

Because subsidized biodiesel that is dumped in the U.S. is currently cheaper than American-made biodiesel, these will be the first gallons bought to meet the RFS volumes. Therefore, lower RFS volumes only exacerbate the harms to the domestic industry. If EPA wants to increase our energy independence, it needs to raise, not lower, the advanced biofuel requirements. Reducing these volumes will simply limit American producers’ share of the market even more until these trade issues are resolved. READ MORE